Saturday, June 30, 2012

The California Governor just signed SB 1038. This bill, among many other things, eliminates the California Fair Employment and Housing Commission, and transfers its duties to the California Department of Fair Employment and Housing. The Commission was the agency that developed regulations and acted as the judicial body that heard claims of discrimination brought before the agency instead of court. Those duties will be handled by the Department internally now. Claims for damages currently before the Commission involving emotional distress will be heard in court rather than before the Commission. Other claims may be heard before an administrative law judge rather than the Commission.

It's unclear how this new law will affect the workings of the DFEH or the Fair Employment and Housing Act. Stay tuned.

SB 1038 is here. But be warned - it's really long and only a small part of it has to do with the FEHC / DFEH piece.

Tired of hearing about the National Labor Relations Board? Unless your business is outside of the NLRB's jurisdiction (because it's too small for NLRB jurisdiction, or your business is a public sector employer, for example), I think it's important to watch what the Board is doing. That's because they are on FIRE. They are not giving up, despite receiving some unfriendly receptions their new initiatives have received in court.

Remember the poster? A couple of months ago, courts invalidated the NLRB's mandate that employers post a list of rights protected under the NLRA. No poster? No problem! The Board is back with a website for employees seeking to understand their rights to engage in protected concerted activity. The web page defines protected activity and contains links to cases addressing the subject that the Board has handled. Here is the website.

Another Board development - they are still issuing white papers on "social media" and protected activity. The NLRB counsel's third essay on the subject is here. If your organization has policies or a handbook listing prohibited employee conduct that could lead to discipline, you should read this memorandum. You may be surprised to learn that some policies you consider to be routine are illegal under the current Board's view of the NLRA. The NLRB's Assistant General Counsel picked through policy after policy, opining on portions that are illegal because they might have something to do with unions or working condition (even though the text of the policies have nothing to do with those subjects). Then, the AGC attaches a policy that the Board found completely, 100% legal.

Here it is:

Social Media Policy

At [Employer], we understand that social media can be a fun and rewarding way to share your life and opinions with family, friends and co-workers around the world. However, use of social media also presents certain risks and carries with it certain responsibilities. To assist you in

making responsible decisions about your use of social media, we have established these guidelines for appropriate use of social media.

This policy applies to all associates who work for [Employer], or one of its subsidiary companies in the United States ([Employer]).

Managers and supervisors should use the supplemental Social Media Management Guidelines for additional guidance in administering the policy.

GUIDELINES

In the rapidly expanding world of electronic communication, social media can mean many things. Social media includes all means of communicating or posting information or content of any sort on the Internet, including to your own or someone else’s web log or blog, journal or diary, personal web site, social networking or affinity web site, web bulletin board or a chat room, whether or not associated or affiliated with [Employer], as well as any other form of electronic communication.

The same principles and guidelines found in [Employer] policies and three basic beliefs apply to your activities online. Ultimately, you are solely responsible for what you post online. Before creating online content, consider some of the risks and rewards that are involved. Keep in mind that any of your conduct that adversely affects your job performance, the performance of fellow associates or otherwise adversely affects members, customers, suppliers, people who work on behalf of [Employer] or [Employer’s] legitimate business interests may result in disciplinary action up to and including termination.

Know and follow the rules

Carefully read these guidelines, the [Employer] Statement of Ethics Policy, the [Employer] Information Policy and the Discrimination & Harassment Prevention Policy, and ensure your postings are consistent with these policies. Inappropriate postings that may include

discriminatory remarks, harassment, and threats of violence or similar inappropriate or unlawful conduct will not be tolerated and may subject you to disciplinary action up to and including termination.

Be respectful

Always be fair and courteous to fellow associates, customers, members, suppliers or people who work on behalf of [Employer]. Also, keep in mind that you are more likely to resolved work related complaints by speaking directly with your co-workers or by utilizing our Open Door Policy than by posting complaints to a social media outlet. Nevertheless, if you decide to post complaints or criticism, avoid using statements, photographs, video or audio that reasonably could be viewed as malicious, obscene, threatening or intimidating, that disparage customers, members, associates or suppliers, or that might constitute harassment or bullying. Examples of such conduct might include offensive posts meant to intentionally harm someone’s reputation or posts that could contribute to a hostile work environment on the basis of race, sex, disability, religion or any other status protected by law or company policy.

Be honest and accurate

Make sure you are always honest and accurate when posting information or news, and if you make a mistake, correct it quickly. Be open about any previous posts you have altered. Remember that the Internet archives almost everything; therefore, even deleted postings can be

searched. Never post any information or rumors that you know to be false about [Employer], fellow associates, members, customers, suppliers, people working on behalf of [Employer] or competitors.

Post only appropriate and respectful content

 Maintain the confidentiality of [Employer] trade secrets and private or confidential information. Trades secrets may include information regarding the development of systems, processes, products, know-how and technology. Do not post internal reports, policies, procedures or other internal business-related confidential communications.

 Respect financial disclosure laws. It is illegal to communicate or give a “tip” on inside information to others so that they may buy or sell stocks or securities. Such online conduct may also violate the Insider Trading Policy.

 Do not create a link from your blog, website or other social networking site to a [Employer] website without identifying yourself as a [Employer] associate.

 Express only your personal opinions. Never represent yourself as a spokesperson for [Employer]. If [Employer] is a subject of the content you are creating, be clear and open about the fact that you are an associate and make it clear that your views do not represent those of [Employer], fellow associates, members, customers, suppliers or people working on behalf of [Employer]. If you do publish a blog or post online related to the work you do or subjects associated with [Employer], make it clear that you are not speaking on behalf of [Employer]. It is best to include a disclaimer such as “The postings on this site are my own and do not necessarily reflect the views of [Employer].”

Using social media at work

Refrain from using social media while on work time or on equipment we provide, unless it is work-related as authorized by your manager or consistent with the Company Equipment Policy. Do not use [Employer] email addresses to register on social networks, blogs or other online tools utilized for personal use.

Retaliation is prohibited

[Employer] prohibits taking negative action against any associate for reporting a possible deviation from this policy or for cooperating in an investigation. Any associate who retaliates against another associate for reporting a possible deviation from this policy or for cooperating in

an investigation will be subject to disciplinary action, up to and including termination.

Media contacts

Associates should not speak to the media on [Employer’s] behalf without contacting the Corporate Affairs Department. All media inquiries should be directed to them.

For more information

If you have questions or need further guidance, please contact your HR representative.

Thursday, June 21, 2012

Shaw Valenza just celebrated its sixth anniversary on 6/19/06. That means it's been six years since we started this blog. So, more than 500 posts after we began, we thank you once again for reading, commenting, and forwarding our posts.

Like many states, California permits unions to represent public sector employees. But employees may "opt out" of paying dues toward these unions' political activities.To permit the "opt out," the unions must issue what are known as "Hudson" notices at least annually, which advise employees of how much of their dues are spent on collective bargaining and how much on political and other non-representative activity. The employees can opt-out of paying the fee not that are not allocated to collective bargaining -related activities. Unions are permitted to rely on the prior year's ratio to set the current year's dues.

This system exists because of the First Amendment. The public sector employer would not be able to force employees to join an organization that requires financing of viewpoints with which the employee does not agree.

So far so good? Well,what if the union issues a Hudson notice, and then a few weeks after the "opt out" period, issues a special fees increase after issuing its Hudson notice? Can it unilaterally do this without a new notice? That was the issue the Supreme Court confronted in Knox v. SEIU, Local 1000.

The Supreme Court said, "no":

To respect the limits of the First Amendment, the union should have sent out a new notice allowing nonmembers to opt in to the special fee rather than requiring them to opt out. Our cases have tolerated a substantial impingement on First Amendment rights by allowing unions to impose an opt-out requirement at all. Even if this burden can be justified during the collection of regular dues on an annual basis, there is no way to justify the additional burden of imposing yet another opt-out requirement to collect special fees whenever the union desires.

Why?

Public sector unions have the right under the First Amendment to express their views on political and social issues without government interference. . . .But employees who choose not to join a union have the same rights. The First Amendment creates a forum in which all may seek, without hindrance or aid from the State, to move public opinion and achieve their political goals. “First Amendment values [would be] at serious risk if the government [could] compel a particular citizen, or a discrete group of citizens, to pay special subsidies for speech on the side that [the government] favors.” ... Therefore, when a public-sector union imposes a special assessment or dues increase, the union must provide a fresh Hudson notice and may not exact any funds from nonmembers without their affirmative consent.

5 justices joined the majority opinion. 2 justices concurred in the judgment, agreeing the union needs to secure consent from the non-members. 2 justices dissented, and would hold that the union gets to set its non-member contribution rate based on the prior year's expenses, even if the union imposes a special assessment immediately thereafter.

The Supreme Court resolved a split between circuit courts and held that pharmaceutical sales representatives engage in "sales" and therefore are exempt under the Fair Labor Standards Act.

Under the FLSA and California law (and other states' laws), "outside salespersons" are exempt from minimum wage and over time law.

The issue for the Supreme Court was that pharmaceutical reps do not really "sell" drugs to doctors. They "sell" to the doctor that the doctor should promise to prescribe the pharma company's medicine. Plaintiffs argued that because the rep makes no "sale" he or she should not be considered a salesperson. Rather, they are non-exempt "promoters."

The Department of Labor took the position that Pharmaceutical reps were non-exempt beginning in 2009. But the DOL's reasoning apparently evolved as to "why." According to the Court, the Agency argued:

“[a]n employee does not make a ‘sale’ for purposes of the ‘outside salesman’ exemption unless he actually transfers title to the property at issue.” Brief for United States as Amicus Curiae 1213 (hereinafter U. S. Brief).13 .

That would seem to remove from the exempt a whole lot of sales persons who previously were exempt, and it was much narrower than regulations and prior case law. So, the Court refused to defer to the DOL interpretation.

The decision was 5-4. The dissent agreed that the government's own interpretation was not worth much. But the dissent's opinion was that the duties performed do not amount to "sales" but rather were promotion activities and non-exempt.

This decision may not directly affect California's outside sales exemption. But it should, because California law does not go into any level of detail regarding what is an "outside salesman." Therefore, the courts and agencies may will follow the Supreme Court's opinion regarding what counts as a sale.

The case is Christopher v. Smithkline Beecham and the opinion is here.

Friday, June 15, 2012

When you present an employee a warning (or a review, etc.), and you ask the employee to sign the document to acknowledge receipt of a copy, and the employee refuses to do so, that is called "insubordination" and is a legitimate reason to fire an employee. Better, still: it's "misconduct" and the employee may be disqualified from unemployment benefits.

The employer does not have to discharge the employee, but it could. I have no idea where this "refuse to sign" notation came from, or when employees gained the power to tell employers what they will and will not sign. Perhaps this decision will change things a bit.

In Paratransit v. UIAB, the employee was in a union. The union contract required employer to obtain the signature of the employee on disciplinary action notices, but the notices had to have a disclaimer that says the employee is only acknowledging receipt of the document. So, employee Craig Medeiros was rude to a customer, the employer tried to give him a disciplinary notice. Employee refused because he feared it would be deemed an admission of guilt, despite the clear disclaimer. He was told he would be fired if he did not sign the document, and he refused. Paratransit fired him.

So, the employee then applied for unemployment, which Paratransit contested. The Unemployment Ins. Appeals Board granted benefits, overturning the decision of an Administrative Law Judge. Paratransit then sought relief in court. The Superior Court agreed with Paratransit, and the employee appealed to the Court of Appeal.

If you're fired for "misconduct" you are disqualified from receiving unemployment. What is misconduct? Unemployment Ins. Code Section 1256 has the answer, as explained by the court:

Section 1256 provides in relevant part: ?An individual is disqualified for unemployment compensation benefits if . . . he or she has been discharged for misconduct connected with his or her most recent work.? Misconduct within the meaning of section 1256 is limited to "conduct evincing such willful or wanton disregard of an employer's interests as is found in deliberate violations or disregard of standards of behavior which the employer has the right to expect of his employee, or in carelessness or negligence of such degree or recurrence as to manifest equal culpability, wrongful intent or evil design, or to show an intentional and substantial disregard of the employer‟s interests or the employee‟s duties and obligations to his employer. On the other hand mere inefficiency, unsatisfactory conduct, failure in good performance as the result of inability or incapacity, inadvertencies or ordinary negligence in isolated instances, or good faith errors in judgment or discretion are not to be deemed "misconduct" within the meaning of the statute . . .

The Court of Appeal held that refusing to sign an acknowledgment, in violation of a direct order to do so, was insubordination and, therefore, misconduct:

Under the circumstances presented, we conclude Claimant‟s failure to sign the disciplinary memo violated his obligations to Employer under Labor Code section 2856. (See Lacy v. California Unemployment Ins. Appeals Bd., supra, 17 Cal.App.3d at p. 1133 [employee must comply unless the employer‟s directive imposes a duty that is both new and unreasonable].) The remaining question is whether such insubordination was misconduct under section 1256 or a good faith error in judgment. ***

As described above, an intentional refusal to obey an employer‟s lawful and reasonable directive qualifies as misconduct. But where an employee, in good faith, fails to recognize the employer‟s directive is reasonable and lawful or otherwise reasonably believes he is not required to comply, one might conclude his refusal to obey is no more than a good faith error in judgment. ***

***Claimant was told to sign the disciplinary memo and that, if he did not, he would be subject to termination. Instead, Claimant requested union representation. He was then told he had no right to union representation at the meeting. Claimant was then instructed to sign the memorandum without union representation. By refusing to do so, Claimant was not seeking redress by other means. He was directly disobeying the employer‟s command.

So, employers have the right to obtain an employee acknowledgment of a disciplinary action. Why is this a big deal? Because employees may later claim that the action notice was "inserted" in the file, or that the employee did not have prior notice that his or her performance was unsatisfactory, or that the employee did not get a chance to see a disciplinary warning. That "refused to sign" language that employers write on unsigned notices is worth nothing in court. The employee's signed acknowledgment is worth a lot. That's why.

To be sure, an employer is not required to fire someone who does not follow directions, or who does not want to sign a disciplinary notice. But then again, there are employers who may wish to impose consequences for employees' who refuse to follow directions. Even in 2012, it's nice to know the employer still has a fundamental management right to ask an employee to obey a legal instruction. Important caveat: it's a good idea for the warning notice to include an express disclaimer, such as: "Signature is only an acknowlegement that the employee received a copy of this notice and does not signify agreement with the contents." Or somethjing like that. Remember: Nothing in this blog is legal advice.

This case is Paratransit Inc. v. Unemployment Ins. Appeals Bd. and the opinion is here.

Tuesday, June 12, 2012

It's nice to blog about one of your own cases, and even better when it's a victory. So, Josephine Okwu was a Caltrans employee, who agreed to disability retirement status. She then wanted to be reinstated from disability retirement status to her former job. Denied, she was unsuccessful under civil service procedure. She then sued CalPERS and Caltrans officials in federal court under 42 U.S.C. Section 1983 for violation of her civil rights.

She had to rely on Section 1983, she believed, because she could not sue her employer, Caltrans, under the Eleventh Amendment. She could not sue CalPERS, either. She could not use the ADA to sue the individuals in any court, because individuals cannot be held liable under the ADA.

The district court dismissed the case because Section 1983 cannot be used as a substitute claim for ADA claims that are not viable in federal court. The Ninth Circuit affirmed:

We conclude that Congress’s inclusion of a comprehensive remedial scheme in Title I of the ADA precludes § 1983 claims predicated on alleged violations of ADA Title I substantive rights. We also conclude that Okwu’s allegations of fact do not state a claim under the Equal Protection Clause. We therefore affirm.

Monday, June 11, 2012

WARNING - Most of you will not care about this. The Supreme Court held today that a federal government employee covered by the Civil Service Reform Act must bring employment claims before the Merit Systems Protection Board, rather than district court.

The MSPB is the exclusive forum, even if the employee is raising a constitutional law claim, and even if the employee is ineligible for federal employment.

In this case, Elgin did not register for the draft and was fired because people who do not register are ineligible for federal employment. He tried to bring a claim at the MSPB, but an ALJ held that MSPB had no jurisdiction over his claims. So, he sued in district court, which denied his claim on the merits. He then appealed to the First Circuit Court of Appeals, which decided that both the district court and the First Circuit lacked jurisdiction.

The Supreme Court agreed, holding that the MSPB can decide constitutional law issues, and that MSPB rulings are subject to review by the Federal Circuit Court of Appeals and by the Supreme Court.

Monday, June 04, 2012

It's hard to keep up with arbitration law in California. Can you waive class actions? Must you attach the entire rule set to the arbitration agreement? Must you serve a nutritious meal when you provide the arbitration agreement? It never ends.

The tension between California case law and case law interpreting the Federal Arbitration Act causes these problems. Last year the U.S. Supreme Court decided in ATT Mobility v. Concepcion that the Federal Arbitration Act allows parties to limit arbitration agreements to single-plaintiff claims. The Court overruled the Califoria Supreme Court's decision in Discover Bank v. Superior Court. We posted about that here.

Discover Bank was about a consumer class action for small dollars / cents per claim. In Gentry v. Superior Court (2007) 42 Cal.4th 443, the California Supreme Court extended Discover Bank to wage-hour class actions. The Court held that a class waiver should not be enforced if "class arbitration would be a significantly more effective way of vindicating the rights of affected employees than individual arbitration."

The U.S. Supremes never mentioned Gentry. So what happened to it after Concepcion?

GENTRY

The Court of Appeal in Iskanian v. CLS Transportation- Los Angeles (opinion here) decided that Gentry is no more. The real news here, though, is that this decision may dispose of - or severely restrict -- the entire body of anti-arbitration case law that has been developed over the past 10 years in California. The language I've quoted below seems to sound the death knell to California courts' hostility to arbitration on "public policy" grounds (assuming this case remains on the books):

Now, we find that the Concepcion decision conclusively invalidates the Gentry test. . . . Concepcion thoroughly rejected the concept that class arbitration procedures should be imposed on a party who never agreed to them. ... This unequivocal rejection of court-imposed class arbitration applies just as squarely to the Gentry test as it did to the Discover Bank rule.

Second, Iskanian argues that the Gentry rule rested primarily on a public policy rationale, and not on Discover Bank‟s unconscionability rationale. While this point is basically correct, it does not mean that Gentry falls outside the reach of the Concepcion decision. ....

Third, the premise that Iskanian brought a class action to "vindicate statutory rights" is irrelevant in the wake of Concepcion. As the Concepcion court reiterated, "States cannot require a procedure that is inconsistent with the FAA, even if it is desirable for unrelated reasons." (131 S.Ct. at p. 1753.) ....

PAGA
This Court then decided that Concepcion applies to PAGA claims too. The Court disagreed with Brown v. Ralphs Grocery Co. (2011) 197 Cal.App.4th 489. "Brown held that the Concepcion holding does not apply to representative actions under the PAGA, and therefore a waiver of PAGA representative actions is unenforceable under California law."
This Court disagreed and held that Concepcion would not allow courts to invalidate arbitration agreements merely because they preclude PAGA claims:

Respectfully, we disagree with the majority‟s holding in Brown. We recognize that the PAGA serves to benefit the public and that private attorney general laws may be severely undercut by application of the FAA. But we believe that United States Supreme Court has spoken on the issue, and we are required to follow its binding authority.

HORTON

The Court then went for the Tri-Fecta and disagreed with the National Labor Relations Board's decision in DR Horton, too. D. R. Horton (2012) 357 NLRB No. 184

In D.R. Horton, the NLRB held that a mandatory, employer-imposed agreement requiring all employment-related disputes to be resolved through individual arbitration (and disallowing class or collective claims) violated the National Labor Relations Act (NLRA) because it prohibited the exercise of substantive rights protected by section 7 of the NLRA.

The Court decided that it was not bound to follow DR Horton:

We decline to follow D.R. Horton. In reiterating the general rule that arbitration agreements must be enforced according to their terms, Concepcion (which is binding authority) made no exception for employment-related disputes. Furthermore, the NLRB‟s attempt to read into the NLRA a prohibition of class waivers is contrary to another recent United States Supreme Court decision. In CompuCredit Corp. v. Greenwood (2012) __ U.S. __, __ [132 S.Ct. 665, 668] (CompuCredit), plaintiff consumers filed suit against a credit corporation and a bank, contending that they had violated the Credit Repair Organizations Act (CROA) (15 U.S.C. § 1679 et seq.).5 The plaintiffs brought the matter as a class action, despite having previously agreed to resolve all disputes by binding arbitration. The Supreme Court rejected their efforts to avoid arbitration, finding that unless the FAA‟s mandate has been "„overridden by a contrary congressional command,‟" agreements to arbitrate must be enforced according to their terms, even when federal statutory claims are at issue. (CompuCredit, at p. 669, citing (1987) 482 U.S. 220, 226.) The Supreme Court held: "Because the CROA is silent on whether claims under the Act can proceed in an arbitrable forum, the FAA requires the arbitration agreement to be enforced according to its terms." (CompuCredit, at p. 673.)

The D.R. Horton decision identified no "congressional command" in the NLRA prohibiting enforcement of an arbitration agreement pursuant to its terms. D.R. Horton’s holding—that employment-related class claims are "concerted activities for the purpose of collective bargaining or other mutual aid or protection" protected by section 7 of the NLRA, so that the FAA does not apply—elevates the NLRB‟s interpretation of the NLRA over section 2 of the FAA. This holding does not withstand scrutiny in light of Concepcion and CompuCredit.

ARMENDARIZ?Well, all that is left is Armendariz. This Court did not touch it expressly. So, stay tuned.... The California Supreme Court is considering related issues. My bet is that the Court will take this case up as well if the parties seek review.

Sunday, June 03, 2012

Robert Rogers is a former officer of Summit Bank, a local, Oakland bank. When Summit learned there were a number of anonymous, negative posts about it on Craigslist, it decided to sue Rogers for defamation. Here are some of his posts, according to the court:

The June 7, 2009 post: ―Being a stockholder of this screwed up Bank, this year there was no dividend paid. The bitch CEO that runs this Bank thinks that the Bank is her personel [sic] Bank to do with it as she pleases. Time to replace her and her worthless son.

The June 21, 2009 post: ―Whats [sic] up at this problem Bank. The CEO provides a [sic] executive position to her worthless, lazy fat ass son Steve Nelson. [¶] This should not be allowed. Move your account now.

The July 14, 2009 post: ―The FDIC and the California Department of Financial Institutions are looking at Summit Bank. This is the third time in less than one year. This is not a good thing, move your accounts ASAP.‖

The July 25, 2009 post: ―I had banked at Summit Banks [sic] Hayward Office. Service was poor and Summit Bank closed this office. Whats [sic] up with that. [¶] All the customer [sic] were left high and dry. This is a piss poor Bank. I would suggest that anyone that banks at Summit Bank leave before they close.

The second July 25, 2009 post: ―Move your accounts now before its [sic] too late.

The Bank learned that Rogers was the author of the anonymous posts and named him in the lawsuit as the defendant.

Rogers then brought an "anti-SLAPP" motion, used to strike lawsuits that arise from protected speech. The Bank argued that Rogers' speech was not protected, because making false allegations about a bank's financial condition is criminal conduct under California law. (When the conduct upon which a lawsuit is based is criminal, a SLAPP motion is barred.)

The trial court denied Rogers' motion because the trial court believed that Rogers' conduct was actionable as defamation and that the Bank was likely to win. Rogers appealed.

The Court of Appeal, though, decided that the trial court should have granted Rogers' Motion to Strike. First, the Court of Appeal held that Financial Code Section 1327 (which criminalizes false statements about a bank's financial condition) is an unconstitutional violation of freedom of speech.

The Court then decided that Rogers' posting on an internet bulletin board was speech in furtherance of the public interest in stable, financially sound banking, entitling him to the protection of the anti-SLAPP statute. Rogers therefore satisfied step one of the two-step analysis applicable to anti-SLAPP motions.

Step 2 involves an analysis regarding whether the plaintiff (Bank) is likely to succeed on its defamation claim against Rogers' posts. The Court of Appeal decided that the Bank could not win on its defamation suit because Rogers' posts were expressions of (1) true facts - such as financial difficulties the bank had experienced or (2) "opinion" rather than fact. The Court took into consideration that the posts were on the "Rants and Raves" part of Craigslist, that bulletin boards are known for hyperbole and strong opinions, and that in context, even the arguably factual statements were more likely to be understood as opinion.

This case proves it can be hard to sue disgruntled ex-employees for defamation based on anonymous web postings. The CEO, called a "bitch," and basically accused of stealing money, has no remedy against Rogers. The Bank, accused of stiffing customers of a closed branch (untrue allegedly), also has no remedy. And because Rogers won his anti-SLAPP motion, he gets his attorney's fees. What a country!